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Abstract
In July 2010, the Australian Government announced that, effective from 1 July
2012, the petroleum resource rent tax will apply to all offshore and onshore oil and
gas projects (including liquefied natural gas and coal seam gas projects), and a
minerals resource rent tax will apply to coal and iron ore projects. State/territory
governments mainly apply ad valorem royalties to oil and gas, coal and iron ore
projects; these royalty payments will be creditable under the Australian Government’s
resource rent taxes. This paper argues that a hybrid system allows governments
to collect a minimum return to the non-renewable resource through the ad
valorem royalty and a share of the rent from higher-profit projects through the
rent-based tax. This paper also provides updated and expanded estimates of the
potential shortfall in resource taxation revenue over the period 1992–1993 to
2009–2010 by comparing actual revenue with revenue under a range of hypothetical
Brown taxes.